Privacy coins become the only crypto sector to surpass Bitcoin's October high

The privacy-coin sector bucked the trend: Zcash-dominated structural market and potential risks

Core points:

1. After Bitcoin hit a record high in October 2025, privacy-coin is the only crypto asset sector with a trading price higher than that high. According to Glassnode data, the sector rose 213%, while Bitcoin itself was 36% below its peak.
2. Market capitalization in the sector increased to US$33.6 billion from US$7.1 billion a year ago, with nearly half of the increase occurring in the past 30 days.
3. Concentration is the main concern: Most of the gains were contributed by Zcash (ZEC), while Monero was flat this week at $505.68; in contrast, ZEC rose 47% in a week.

The "island" effect that transcends the broader market

More than 335 days after Bitcoin hit an all-time high in October 2025, the trading price of one crypto asset sector is still above the top level at that time. According to Glassnode, privacy coins have risen 213% since then, while all other categories have fallen below this high, ranging from 27% below DeFi (decentralized finance) to 74% below games. Bitcoin itself is down 36% from its record high, and the median of the top 200 assets is down 58%.

We started tracking this privacy rotation trend as early as July 8. At the time, Zcash was trading at $469.57, making it the only large-cap token to rise against the backdrop of a market decline. Today, this was once regarded as an anomaly for a single token and has evolved into the most representative sector trading theme in 2026.

Driving forces for the rebound of privacy coins

Factors driving the market include: compliance access, supply stories and self-reinforcing funding rotations.

1. First breakthrough in compliance access

Over the past decade, private assets have often been removed from regulated trading venues rather than added to them. However, Grayscale's spot Zcash product went public on August 25 on the New York Stock Exchange's Arca platform and attracted approximately $463 million in funding. This marks a structural change in the entities holding the asset, not just a shift in market sentiment.

2. Supply narrative: Bitcoin's shadow

The logic of supply comes from Bitcoin itself. Zcash shares the total cap of 21 million bitcoins, the proof-of-work (PoW) security mechanism and the halving cycle, and the current circulation volume is approximately 16.86 million bitcoins. The core argument of the bullish view remains the same: Assets with Bitcoin emissions disciplines coupled with privacy characteristics should not be traded at just a tiny percentage of the Bitcoin price. This year, this ratio has narrowed significantly.

3. Expansion and contraction of rotation

After Zcash initially rose, funds began to search for other targets. Previously, we looked at Zano, which topped the list of views, and Zama, a cryptographic infrastructure project that entered the hot list a few weeks later. They are all beneficiaries of the attention Zcash creates.

Is the entire sector rising, or is it just Zcash that stands alone?

It's mainly Zcash that is up, a distinction that is crucial for those who view this type of sector trading.

Zcash's cumulative increase in 2026 will be approximately 2500%, driving most of the growth in the sector's market value. In the current market, ZEC rose 47.05% in a week to US$1,223.52, while Monero, the sector's second-largest asset, traded at US$505.68, down 0.35% over the same period. Zano rose 12.79% on the day, but still fell 6.01% weekly.

When the largest component of a sector index rises, it often conceals the fact that most members are not participating. This is the current situation. Buying the "privacy" theme currently largely means buying Zcash. Any investor who tries to reduce risk by diversifying his investment may dilute the key exposure that generates returns rather than truly diversifying the risk.

Why failed to follow up simultaneously?

In short, the answer is "access." The two tokens answer different questions, and the market is currently paying a premium for one.

Monero hides the sender, recipient and amount of each transaction by default, making it a more powerful privacy tool, but also more difficult to list in regulated venues. Zcash's Shielded transactions are optional and while reducing the size of its anonymous collection, provide a workable compliance answer for exchanges.

When comparing the two, we pointed out that Zcash has an advantage in terms of access and regulatory exposure, while Monero scores higher in terms of privacy and history. We believe that the real dividing line in this sector lies in "licensing" rather than "cryptography". Subsequent ETF funding flows confirm this: Tokens that can be packaged in U.S. listed products, regardless of their privacy, are attracting institutional capital.

Is this rebound sustainable?

Capital inflows are continuous, but mechanical buying is not, and regulatory issues are another independent variable with clear time points.

A large part of the recent market has come from short liquidations. According to CoinGlass data, ZEC recorded approximately US$45.32 million in short liquidations in a single day. Forced buying triggered by closing short positions is real demand, but its fuel supply is limited; once the short positions disappear, the momentum stops, often abruptly. In contrast, ETF inflows can persist, making asset growth tracking ZCSH (presumably referring to the relevant ETF or asset symbol) more valuable than the daily K-line.

Regulatory risks have not shifted and technical levels are not respected. The EU's Anti-Money Laundering Framework Plan restricts regulated providers from providing tokens that enhance anonymity from July 1, 2027, and the text of the legislation is available through EUR-Lex. This applies to the entire EU block rather than a single exchange. The U.S. listing does not bind European regulators, and Monero faces higher regulatory exposure than Zcash due to privacy features that cannot be closed that are difficult to achieve compliance as required.

What will change the situation?

There are two key variables, which are located on both sides of supply and demand.

On the one hand, if ZCSH's capital inflows remain close to the pace at the beginning of the launch and other issuers submit competing products, the "entry" argument will be strengthened and there will be further room for repricing of the sector. On the other hand, if capital inflows stagnate and short interest has been cleared, mechanical buying will disappear, and a sector that has risen by 213% will face huge correction pressure.

At the regulatory level, as July 2027 approaches, the shape of EU implementing rules is the biggest variable. If the rules broadly target technologies that enhance anonymity rather than specifically address non-disclosing privacy, Zcash's core advantages will evaporate and its premium will become a burden.

Conclusion

Privacy coins are currently the only crypto sector whose trading price is higher than Bitcoin's October 2025 historical high, with an increase of 213%, while all other categories are below that high. However, this gain is mainly concentrated on Zcash and is not evenly distributed among various plate members.

The trading strategy that will work in 2026 is not simply "privacy", but "privacy assets that regulators tolerate and that ETFs can hold." This is a much narrower argument than the sector chart suggests, and it is tied to the 2027 timeline.

This article is for reference only and does not constitute investment advice. Crypto assets fluctuate very much and you may lose all your principal. Make sure to conduct independent research.